With a grassroots lobbying campaign by many financial advisers underway, the AFA has come out strongly against the Trowbridge and FSC recommendations regarding risk remuneration.
In a strongly-worded statement issued on Friday, AFA chief executive Brad Fox said that while his association and its members were “open to change” – including entertaining the notion of a ban on high upfront commissions – the original intent of the Life Insurance and Advice Working Group [LIAWG] process has been lost.
“We believed in the LIAWG terms of reference, which were to find a unified solution that the whole industry could support,” Mr Fox said.
“It is a great disappointment that this was not achieved, and that the terms of reference were not delivered.”
Describing the report’s recommendations as “unworkable [and] impractical”, Mr Fox accuses the Trowbridge Report of not valuing the importance of life insurance advice and offering a model that is not sustainable.
“The proposals put forward are based on unsupported assumptions and inadequate research,” Mr Fox said. “There has been no independent assessment of the potential implications [for] consumers, financial advisers and licensees.”
The AFA boss called on all stakeholders, including the insurers, to publicly release their submissions to the LIAWG in light of the FSC’s submission which argued for level commissions.
“With the FSC submission to Trowbridge calling for such a significant change to adviser remuneration, the time has come to ensure that the life insurers are transparent about their case for this significant change, including publishing modelling as to the effects on consumers, advisers, licensees and life insurers,” he said.
At the same time, Mr Fox made clear that the AFA is still supportive of an industry-wide response to the Trowbridge recommendations.
The AFA's submission to the LIAWG can be found here: http://www.afa.asn.au/documents/item/777
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